Intellectual capital disclosure and dividend policy: evidence from the Danish biotechnology sector

The purpose of this article is to document the relationship between intellectual capital disclosure and dividend policies of biotechnology firms listed on the Copenhagen Stock Exchange during the period between 2001 and 2010. The firms' intellectual capital disclosures were computed from the annual financial reports, while data on dividend policies was retrieved from Worldscope. This paper defines dividend policies by three variables: 1) dividend payout ratio; 2) decision to pay dividend; 3) increase in dividend payout. The results show that firms with higher intellectual capital disclosures not only have high payout ratios, but also have a greater likelihood of increasing and paying dividends. Our findings are consistent with our hypothesis that lower information asymmetries of firms with high intellectual capital disclosure lead to more favourable dividend policies. In opposition to the expected hypotheses, the data does not indicate that intellectual capital disclosure and dividend policies affect firm performance or firm valuation.